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Tue 4 Apr 2017 10:56 AM

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MENA e-commerce sector 'to grow tenfold' by 2020

Arab Federation of e-Commerce to publish strategy for developing the sector in May

MENA e-commerce sector 'to grow tenfold' by 2020

A pan-Arab government body is preparing to release a five-year strategy it claims will help grow the region’s e-commerce sector from $20 billion in 2017 to $200 billion beyond 2020, an official told Arabian Business.

The Arab Federation of e-Commerce is headquartered in Cairo and comprises representatives from 14 governments across the MENA region.

It was set up a year ago to promote and develop the region’s e-commerce sector at a time when emerging online retail patterns are starting to disrupt traditional business models.

The 50-page document, set to be unveiled next month, will make a series of recommendations to member states, including the introduction of new laws to help e-commerce outfits grow their businesses, Dr Ali Al Khouri, first deputy chairman of the Arab Federation for e-Commerce, told Arabian Business on Monday.

Al Khouri, who is also chairman of the Supreme Committee in Abu Dhabi, said the strategy is expected to bring about positive regulatory change, and that the UAE “would be at the forefront of this change”.

E-commerce accounts for only around 0.71 percent of the MENA region’s total GDP at present, compared to 3 percent for the rest of the world and as much as 5 percent in some countries such as the US.

“[The MENA figure] is really very low and the federation will work to improve this,” Al Khouri said, adding: “We are aiming to provide support to the Arab countries as they grow their e-commerce sectors, by ensuring that the right procedures are in place, benchmarked against international practices.

“Over the next few years e-commerce will replace traditional practices in the retail and commerce field.”

Among the possible regulatory changes are amendments to free zone’s import and export tariffs to make it more cost-effective for smaller e-commerce players to distribute their goods, and measures to strengthen e-payment gateways.

At present, the majority of Arab consumers still prefer to pay in cash and are reluctant to give away personal information online, said Al Khouri’s colleague, Abdul Wahab Ghoneim, UAE-based vice-chairman of the Arab Federation of e-Commerce.

Ghoneim said it was “entirely feasible” that the region could grow the size of its e-commerce industry tenfold to $200 billion “because the sector currently serves only around 1 percent of the MENA population”.

With rising population growth in the Arab world, and MENA accounting for 5 percent of the world’s population, there is huge untapped potential, Ghoneim argued.

“With the exciting addition of Amazon to the region, and the forthcoming launch of [Emaar founder ] Mohammed Alabbar’s venture Noon, e-commerce is really going to take off,” he said.

The five-year strategy is due to be unveiled at the Seamless e-commerce and digital economy conference in Dubai next month.

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